Tuesday, August 30, 2005

It's all about the CYA

According to the Wall Street Journal many analysts are doing the full court press on real estate to the point that they are looking at every detail no matter how trivial to figure out when the correction will occur.

Securities analysts following home builders traditionally research and write about a range of topics because the health of the industry is tied to many variables -- from the economy to immigration and demographics. But now that the fate of the housing market has become one of the most-closely watched stories in the U.S., analysts are following every twist in the data, from big picture to granular, trying to discern when the nation's possible housing bubble might burst.

For example, Ms. Zelman tracks 14 home builders but also produces lengthy reports on sales at Sherwin-Williams Co. paint stores, whose business may send signals about homeowners' tidying up to sell or fixing up new purchases.

"We're putting out as much information as possible," said Ms. Zelman, who heads a team of analysts who scrutinize dozens of economic indicators each week and survey more than 150 "channel checkers" -- people who collect data from furniture companies, building-supply chains and real-estate brokers to get an on-the-ground look at current conditions.

So why all this effort? Well first of all it is obvious.

"Everybody is waiting for the shoe to drop, so none of these analysts want to be the last one out the door" said Rick Anderson, a spokesman for the Public Home Builders Council of America. "They feel as though they have to examine and microexamine every bit of information."

Bottomline, no one one wants their pants down with their asses hanging in the breeze. It also goes to show how much is riding on the housing market since all these Wall Street rocket scientists are giving this market a full body cavity search.